GMT
15/07/2014 09:02
WAV/RULE
REL: 0902 HRS Goodman Property Trust
WAV/RULE: GMT: GMT - Waivers from NZX Main Board Listing Rules
NZX Regulation Decision
Goodman Property Trust ("GMT")
Applications for waivers from NZX Main Board Listing Rules 6.2.1(a), 6.2.2,
7.3.1, 7.3.2, 7.5, 9.2.1, and 9.2.5(b)
15 July 2014
Application 1 - Waiver from Rule 6.2.1(a)
Decision
1. On the conditions in paragraph 2 below, NZX Regulation ("NZXR") grants GMT
a waiver from the requirement within NZX Main Board Listing Rule 6.2.1(a)
("Rule 6.2.1(a)") to set out in the Notice of Meeting the maximum number of
Units that may be issued to the Manager pursuant to the proposed Amended Fee
Structure.
2. The waiver in paragraph 1, above, is provided on the conditions that:
a. The terms of the Amended Fee Structure in the Trust Deed, including the
methodology for calculating the number of Base Fee Units to be issued under
the Amended Fee Structure, are clearly outlined in the Notice of Meeting;
b. The Trust Deed amendments clearly provide that the obligation to subscribe
for Units under the amended base fee provisions will not be applicable to the
extent that the issue of Units would cause Goodman Group to hold 25% or more
of the total Units;
c. The Notice of Meeting sets out the terms and effect of the waiver; and
d. The waiver is granted for a period of five years.
3. The information on which this decision is based is set out in Appendix One
to this decision. This waiver will not apply if that information is not, or
ceases to be, full and accurate in all material respects.
4. The Rules to which this decision relates are set out in Appendix Two to
this decision.
Reasons
5. In coming to the decision to provide the waiver set out in paragraph 1
above, NZXR has considered that:
a. The number of Base Fee Units to be issued to the Manager in any given year
is dependant on a number of factors, including the amount of any Rebate and
the relevant issue price of the Base Fee Units. As none of this information
will be determined at the time that Unitholder approval is sought, there is
no means by which this information can be provided in advance for any given
year;
b. The number of Base Fee Units to be issued under the Trust Deed is
determined by objective criteria that will, pursuant to the conditions of the
waiver, be clearly outlined to Unitholders in the Notice of Meeting -
including the methodology for calculating the number of Base Fee Units to be
issued;
c. A key policy underlying Rule 6.2.1(a) is to ensure that Unitholders have
sufficient information on which to make a decision whether to approve the
precise terms and conditions of a specific proposal to issue Securities. The
granting of the waiver in paragraph 1 will not offend the policy behind Rule
6.2.1(a);
d. The conditions of the waiver provide comfort that Unitholders will have
sufficient information on which to make a decision whether to approve the
issue of Units under the proposed Amended Base Fee structure;
e. The Trust Deed has been amended to ensure that the obligation of the
Manager to subscribe for Base Fee Units will not be applicable to the extent
that the issue of Base Fee Units would cause Goodman Group to hold 25% or
more of the total Units (assuming that any issue of Units expected to be made
in payment of the Performance Fee, or otherwise expected to be made to
Goodman Group, had been made); and
f. There is precedent for this decision.
Application 2 - Waiver from Rule 7.3.1, 7.5 and 9.2.1
Decision
6. GMT sought a waiver from Rules 7.3.1, 7.5 and 9.2.1 to the extent that
these Rules would require GMT to pass an ordinary resolution in addition to
the extraordinary resolution required to amend the Trust Deed in respect of
the proposed Amended Fee Structure. NZXR declines to grant GMT a waiver from
Rule 7.3.1, 7.5 and 9.2.1.
7. The information on which this decision is based is set out in Appendix One
to this decision.
8. The Rules to which this decision relates are set out in Appendix Two to
this decision.
Reasons
9. In coming to the decision to not grant a waiver from Rules 7.3.1, 7.5 and
9.2.1, NZXR has determined that a waiver is not required in this instance.
NZXR notes that GMT is already proposing to seek shareholder approval for the
Resolution, and considers that the passing of the Resolution (an
extraordinary resolution) would satisfy the requirements of an ordinary
resolution. NZXR also notes that the Notice of Meeting can provide sufficient
explanation so that the Rules and the requirement for an ordinary resolution
will be satisfied.
Application 3 - Waiver from Rules 7.3.2
Decision
10. On the conditions in paragraph 11 below, NZXR grants GMT a waiver from
NZX Main Board Listing Rule 7.3.2 ("Rule 7.3.2") to allow GMT to issue the
Base Fee Units to the Manager for a period of five years without annual
approval from Unitholders.
11. The waiver in paragraph 10 above, is provided on the conditions that:
a. The terms and effect of the waiver are disclosed in the Notice of Meeting
and each offering document or prospectus (or other public disclosure document
that may replace such documents) distributed or registered in respect of an
offer of Units during the period in which the waiver is relied upon;
b. The number and price of Base Fee Units issued is disclosed in each annual
report and interim report during the period in which the Base Fee Units are
issued; and
c. The waiver is granted for a period of five years.
12. The information on which this decision is based is set out in Appendix
One to this decision. This waiver will not apply if that information is not,
or ceases to be, full and accurate in all material respects.
13. The Rules to which this decision relates are set out in Appendix Two to
this decision.
Reasons
14. In coming to the decision to provide the waiver set out in paragraph 10
above, NZXR has considered that:
a. The granting of the waiver in paragraph 10 above, will not offend the
policy considerations underlying Rule 7.3.2, which include ensuring that
Issuers do not unduly delay the issue of securities for which they have
received approval and that Unitholders, and potential subscribers of Units,
are fully aware of the circumstances in which Units are being issued;
b. As GMT is required by the conditions to the waiver to publish the number
and price of any Base Fee Units issued under the Amended Fee Structure
annually, and as GMT must provide allotment notices to the market in respect
of the issue of Units, potential investors in GMT will have an opportunity to
consider the terms and implications of the Amended Fee Structure; and
c. There is precedent for this decision.
Application 4 - Waiver from Rules 6.2.2 and 9.2.5(b)
Decision
15. On the conditions in paragraph 16 below, NZXR grants GMT a waiver from
NZX Main Board Listing Rules 6.2.2 and 9.2.5(b) ("Rule 6.2.2 and 9.2.5(b)")
to the extent that it requires GMT to prepare an Appraisal Report about the
Amended Fee Structure to accompany the Notice of Meeting.
16. The waiver in paragraph 15 above, is provided on the conditions that:
a. The Notice of Meeting clearly sets out that the Base Fee Units to be
issued under the Amended Fee Structure are issued at the higher of the
weighted average price of Units on NZX over the five day trading period
immediately before the date of receipt of the base management fee, and the
net asset value per Unit on the day before that date;
b. The Notice of Meeting sets out similar analysis regarding control issues
as set out in the 2005 Appraisal Report;
c. The Trustee certifies that:
i. it has considered the proposed Amended Fee Structure and has been involved
in discussions with the Issuer relating to the proposed amendments to the
Trust Deed; and
ii. as a result, it considers that the analysis in the Notice of Meeting
relating to the Amended Fee Structure is fairly made and the information
contained in the Notice of Meeting should allow the Unitholders to make an
informed decision with regard to the Resolution;
d. All Independent Directors of the Manager certify that:
i. they consider that the proposed amendments to the Trust Deed are in the
best interests of the Unitholders;
ii. they are satisfied as to the accuracy of the analysis set out in the
Notice of Meeting regarding potential "control issues" and issues arising due
to the "Related Party" feature of the transaction;
iii. they have received legal advice as to any legal aspects of that
analysis, including as concerns the Unit Trusts Act 1960 and the Financial
Markets Conduct Act 2013; and
iv. they do not consider that the proposed amendments to the Trust Deed will
have a significant impact on control of GMT;
e. The Notice of Meeting contains confirmation from the Independent Directors
that they have received confirmation from Goodman Group that it has no
current intention of holding 25% or more of the units in GMT; and
f. The Notice of Meeting sets out the details of the waiver and its
implications (mainly, that there will be no new appraisal report assessing
the potential control and related party implications).
17. The information on which this decision is based is set out in Appendix
One to this decision. This waiver will not apply if that information is not,
or ceases to be, full and accurate in all material respects.
18. The Rules to which this decision relates are set out in Appendix Two to
this decision.
Reasons
19. In coming to the decision to provide the waiver set out in 15 above, NZXR
has considered that:
a. The issue of the Performance Fee Units, and its effect, has previously
been considered by Unitholders at several unitholder meetings. Therefore,
the general concepts are not unfamiliar to Unitholders;
b. The 2005 Appraisal Report discusses the impact of an increase in the
Manager's unitholding and the conditions in this waiver provide comfort that
similar analysis is provided in the Notice of Meeting;
c. The Rebate provides for a reduction in the amount of base fee to be paid
to the Manager and the conditions of the waiver provide comfort that the
price at which Base Fee Units are issued will be calculated in an objective
manner and will be at market price or above. This ensures that the Manager,
as a Related Party of GMT, is not gaining, or being perceived as gaining,
favourable treatment due to the Manager's relationship with GMT. Therefore,
the granting of the waiver under this condition will not offend the policy
behind Rule 9.2.5(b);
d. The certification conditions provide comfort that:
i. the Trustee, having been involved in the discussions relating to the
establishment of the Amended Fee Structure, considers that the analysis in
the Notice of Meeting relating to the Amended Fee Structure is fairly made
and that Unitholders have sufficient information to make an informed decision
with regard to the Resolution;
ii. the Independent Directors of the Manager have:
1. received legal advice on any legal aspects of the analysis of "control"
issues and issues arising due to the "Related Party" feature of the
transaction, as set out in the Notice of Meeting; and
2. considered this analysis in the Notice of Meeting and are comfortable with
the conclusion that the proposed Amended Fee Structure will not have a
significant impact on the control of GMT;
e. The certification conditions in the waiver provide comfort that the
Independent Directors of the Manager consider that the Amended Fee Structure
is in the best interests of the Unitholders;
f. The confirmation that the Goodman Group currently has no intention to
increase its unitholding to 25% or above provides the Unitholders with
greater comfort as to the potential effect of the proposed Amended Fee
Structure and minimises the risk of any change in control and the impact of
any dilution of the current Unitholders holdings;
g. The policy underlying Rule 6.2.2 and 9.2.5(b) is to ensure that
Unitholders are provided with sufficient information to understand the terms
and effect of the transaction, where that transaction involves the Issuer:
i. entering into a transaction where there is a significant likelihood that
the issue of Securities will result in any person or group of Associated
Persons materially increasing their ability to exercise effective control of
that Issuer (Rule 6.2.2); or
ii. entering into a transaction with a Related Party that is a Material
Transaction (Rule 9.2.5(b));
h. NZXR will have the opportunity to review and approve the Notice of Meeting
at which the Resolution will be considered to ensure that it includes a
balanced summary of the proposed Amended Fee Structure and sufficient
information to enable Unitholders to understand the terms and effect of the
Amended Fee Structure;
i. There is precedent for this decision.
Appendix One - Information
1. Goodman Property Trust (GMT) is a unit trust listed on the NZX Main Board
and is subject to the Rules.
2. GMT is managed by Goodman (NZ) Limited (the "Manager"), which is a wholly
owned subsidiary of Goodman Limited (together, with Goodman Industrial Trust,
and Goodman Logistics (HK) Limited, operating together as a stapled group,
and each of their controlled entities, as the context requires, the "Goodman
Group").
3. GMT's current management fee structure provides for both a base fee and
performance fee component to be paid to the Manager. The current base fee
component is based on the book value of GMT's assets (other than cash and
trade debtors) and is paid in cash, monthly in arrears. The current
performance fee component is determined by reference to GMT's performance, is
calculated and paid yearly in arrears, and provides, in the ordinary course,
for Units to be issued to GMT, in lieu of cash (the "Performance Fee Units").
4. The Manager intends to amend GMT's current management fee structure
through various amendments to the trust deed between GMT and Corporate Trust
Limited (the "Trustee") dated 23 April 1999 and as amended from time to time
(the "Trust Deed"). If amended, the following management fee structure would
apply (the "Amended Fee Structure"):
a. GMT will receive a fee rebate from the Manager on its base management fee
in relation to GMT's development land portfolio (the "Rebate"); and
b. the Manager will be required, subject to certain exceptions set out in the
Trust Deed, to subscribe for Units as consideration for its base management
fee, for a five-year period from 1 April 2014 to 31 March 2019 ("Base Fee
Units").
5. At a meeting of GMT unitholders ("Unitholders") to be held on 5 August
2014 (the "Unitholder Meeting"), Unitholders will be asked to consider an
extraordinary resolution approving the proposed amendments to the Trust Deed
relating to the Amended Fee Structure - as required by clause 27.1(f) of the
Trust Deed (the "Resolution"). Information will also be provided to the
Unitholders in the notice of meeting relating to the Unitholder Meeting (the
"Notice of Meeting").
6. Rule 6.2.1(a) requires that the number of Base Fee Units, or maximum
number of Base Fee Units, to be issued under the Amended Fee Structure be
tabled in the Notice of Meeting.
7. Rule 7.3.2 requires that any issue of the Base Fee Units authorised by
resolutions passed under Rule 7.3.1(a) at the Unitholder Meeting, that is not
to be made solely to employees, must be completed within twelve months of
that resolution being passed.
8. For the Amended Fee Structure to be effective, GMT requires the ability to
calculate the number of Base Fee Units to be issued on a six monthly basis
and to be allowed to issue the Base Fee Units for a period of five years.
NZXR has previously granted waivers to GMT to enable this, including allowing
the Performance Fee Units to be calculated and issued on a perpetual basis.
9. The amendments to the Trust Deed relating to the Amended Fee Structure
provide that the number of Base Fee Units to be subscribed for will be
determined by objective criteria and that the obligation of the Manager to
subscribe for Base Fee Units will not be applicable to the extent that the
issue of Base Fee Units would cause Goodman Group to hold 25% or more of the
total Units (assuming that any issue of Units expected to be made in payment
of the Performance Fee, or otherwise expected to be made to Goodman Group,
had been made).
10. The independent directors of the Manager (the "Independent Directors")
have also received confirmation from Goodman Group that the Goodman Group
currently has no intention to increase its unitholding to 25% or above.
11. As 100% of the units issued under the Amended Fee Structure will be
issued to the Manager, as an "Associated Person" of GMT, an appraisal report
is required to accompany the relevant Notice of Meeting, in accordance with
Rule 6.2.2(b). The issue of units may also result in Goodman Group, as an
"Associated Person" under Rule 7.5, materially increasing its ability to
exercise, or direct the exercise of, effective control of GMT. As such, an
appraisal report may be required to accompany the relevant Notice of Meeting,
in accordance with Rule 6.2.2(a).
12. Further, the Manager is a "Related Party" of GMT for the purposes of Rule
9.2.1 due to the nature of the current management fee arrangement, as well as
relationship between GMT and the Manager, including that the Goodman Group
(of which the Manager is a member) owns more than 10% of the Units (and
voting rights) of GMT.
13. The proposed Amended Fee Structure may be a "Material Transaction" for
the purposes of Rule 9.2.2(b), as the Manager may, through a related series
of transactions, acquire units in GMT having a market value in excess of 10%
of the average market capitalisation of GMT.
14. The Amended Fee Structure will therefore be a Material Transaction with a
Related Party for the purposes of Rule 9.2.1, requiring an appraisal report
to accompany the relevant Notice of Meeting in accordance with Rule 9.2.5(b).
15. The issue of the Performance Fee Units as a component of the management
fee structure, and its effect, has been considered at several previous
meetings of GMT Unitholders. Appraisal reports have also previously been
provided by GMT at meetings relating to changes in control and the issue of
Units in GMT to the Manager - specifically the appraisal report dated 2005
prepared by Deloitte Corporate Finance in relation to the Trust (the "2005
Appraisal Report").
16. NZXR has previously provided waivers in the nature of applications 1 - 3,
in respect of the issue of Performance Fee Units, on 4 March 2005, 7 November
2007 and 18 October 2010. The waiver granted on 18 October 2010 provided
that GMT may issue the Performance Fee Units in perpetuity.
Appendix Two - NZX Main Board Listing Rules
Rule 6.2 Notices of Meeting
6.2.1(a) The text of any resolution to be put to a meeting of an Issuer for
the purposes of Rule 7.3.1, Rule 7.3.5(c), Rule 7.5 or Rule 7.6.5 shall be
set out in the notice of the relevant meeting. That notice shall be approved
by NZX in accordance with Rule 6.1, and shall contain the precise terms and
conditions of the specific proposal to issue, ratify the issue of, acquire,
or redeem the Securities in question, or to provide financial assistance. The
resolution shall not authorise any issue, acquisition, redemption or
assistance which varies in any material respect from the description in the
notice. As a minimum, the notice or the papers accompanying it shall state or
contain so much of the following information as is applicable:
a) the number of Securities to be issued, acquired, or redeemed or, if the
number is not known, the formula to be applied to determine the number, and
the maximum number which may be issued, acquired or redeemed;
6.2.2 A notice of meeting to consider a resolution of the nature referred to
in Rule 6.2.1 shall be accompanied by an Appraisal Report if;
(a) the resolution is required by Rule 7.5; or
(b) in the case of an issue, the issue is intended or is likely to result in
more than 50% of the Securities to be issued being acquired by Directors or
Associated Persons of Directors of the Issuer; or
(c) in the case of an acquisition or redemption or the giving of financial
assistance, it is intended or likely that more than 50% of the Securities to
be acquired or redeemed will be Securities held by Directors or Associated
Persons of Directors of the Issuer, or that more than 50% of the total
financial assistance to be given will be given to such persons.
Rule 7.3 Issue of New Equity Securities
7.3.1 No Issuer shall issue any Equity Securities (including issue on
Conversion of any other Security) unless:
(a) the precise terms and conditions of the specific proposal to issue those
Equity Securities have been approved (subject to Rule 7.3.3) by separate
resolutions (passed by a simple majority of Votes) of holders of each Class
of Quoted Equity Securities of the Issuer whose rights or entitlements could
be affected by that issue, and that issue is completed within the time
specified in Rule 7.3.2; or
(b) the issue is made in accordance with any of Rules 7.3.4 to Rule 7.3.11.
7.3.2 An issue authorised by resolutions passed pursuant to Rule 7.3.1(a)
shall be completed:
(a) if that issue is made solely to Employees within 36 months after the
passing of those resolutions; or
(b) in all other circumstances, within twelve months after the passing of
those resolutions.
Rule 7.5 Issues and Buybacks of Securities Affecting Control
7.5 Notwithstanding the provisions of Rules 7.3 and Rule 7.6, no issue,
acquisition, or redemption of Securities shall be made by an Issuer if:
a) there is a significant likelihood that the issue, acquisition, or
redemption will result in any person or group of Associated Persons
materially increasing their ability to exercise, or direct the exercise of
(either then or at any future time) effective control of that Issuer; and
(b) that person or group of Associated Persons is entitled before the issue,
acquisition, or redemption to exercise, or direct the exercise of, not less
than 1% of the total Votes attaching to Securities of the Issuer;
Unless the precise terms and conditions of the issue, acquisition or
redemption have been approved by an Ordinary Resolution of the Issuer.
Rule 9.2 Material Transactions with Related Parties
9.2.1 An Issuer shall not enter into a Material Transaction if a Related
Party is, or is likely to become:
(a) a direct or indirect party to the Material Transaction, or to at least
one of a related series of transactions of which the Material Transaction
forms part; or
(b) in the case of a guarantee or other transaction of the nature referred to
in paragraph (d) of the definition of Material Transaction, a direct or
indirect beneficiary of such guarantee or other transaction,
Unless that Material Transaction is approved by an Ordinary Resolution of the
Issuer.
9.2.2 For the purposes of Rule 9.2.1, "Material Transaction" means a
transaction or a related series of transactions whereby an Issuer:
...
(b) issues its own Securities or acquires its own Equity Securities having a
market value in excess of 10% of the Average Market Capitalisation of that
Issuer, save in the case of an issue pursuant to Rule 7.3.5 where only the
market value of those Securities being issued to the Related Party or to any
Employees of the Issuer are to be taken into account;
9.2.5 The text of any resolution to be put to a meeting of an Issuer for the
purposes of Rule 9.2.1 shall be set out in the notice of the relevant
meeting. That notice shall be:
...
(b) be accompanied by an Appraisal Report;
End CA:00252736 For:GMT Type:WAV/RULE Time:2014-07-15 09:02:03
